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‘Cutting-edge’ to cut down global IT firms’ India plans
NEW DELHI: The government’s breather for technology companies, including US-based Apple, is likely to run into a hurdle over the definition of “cutting-edge”.
The Modi government on Monday announced a three-year exemption from 30% local sourcing norm for foreign companies looking to set up single-brand retail stores in India, and an additional five years for those that bring in “cutting-edge” technology.
According to a top finance ministry official, the administrative ministries will now certify on a case-to-case basis whether a single-brand proposal of any foreign company can be termed “cutting-edge”.
The decision will depend on the product and the concerned ministry, like the IT department in Apple’s case.
Industry secretary Ramesh Abhishek confirmed to HT that government officials are discussing such a proposal.
“The decision will depend on the relevance and nature of the technology used. It will have to be a view taken by the ministry concerned” said the official quoted above. “While the application will have to be made to the DIPP (Department of Industrial Policy and Promotion), it’s up to the IT department to take a view on whether Apple is bringing in ‘cutting-edge’ technology.”
Hence, the current process of a DIPP secretary-headed panel recommending the proposal of a company to get the sourcing exemption will cease to exist, another source added.
While the finance ministry has been insisting on a definition, the commerce ministry, which houses the DIPP, has made it clear that “cutting edge” cannot be defined.
The talks between the two ministries are on, and no decision has been taken, said Abhishek.
Experts, however, said that without a clear definition of what makes a technology “cutting-edge”, it will be tough for companies to put up their investment proposals before the government. Even policymakers will have to grapple with questions like whether Apple’s high-end technology is more “cutting-edge” than certain low-priced innovations.
“The government appears to have tightened the sourcing norms for single-brand retail in products having ‘state-of-the-art’ and ‘cutting-edge’ technology. The language is not too clear,” said Kalpesh Maroo, partner, BMR & Associates LLP.
Meanwhile, sources said Apple will have to re-apply for opening retail stores in India, to avail the new FDI norms.